Since 2000, Michigan lost 540,750 residents to
interstate migration (though the state's overall population rose slightly due
to other factors).

In contrast, Texas added 848,702 residents through interstate migration. The
meaning of these numbers cannot be overemphasized: There is perhaps no better
single measurement of an area's quality of life than migration.

The Lone Star
State has become one of America's premier "destination" states, while Michigan
has become the country's classic "departure" state. If Michigan once again
raises its taxes, as Gov. Jennifer Granholm proposes, it will only continue to
feed Texas' success.

The Mackinac Center’s own migration study — authored by adjunct scholar Michael Hicks — found that nationwide, people are moving to states with lower taxes, more flexible labor climates and more days of sunshine.

A key factor
driving these migration patterns is economic liberty, as several studies have found in recent years. The Pacific Research Institute
in California created an index that contains 143 different variables designed
to measure economic freedom. The institute's most recent report (2008) ranks
Michigan the 43rd economically freest state and Texas the 31st. The study's
authors conducted a statistical analysis of state-to-state migration and showed
that this migration is correlated with their index of economic freedom.

The American Legislative Exchange Council in
Washington, D.C., has published a "Competitiveness Index" for each state based on 15 policy
variables, such as income and corporate taxes, tax progressivity, and
right-to-work protections. Based on these metrics, the authors created economic
outlook and economic performance rankings. In the 2009 version, Michigan's
outlook ranked 34th, and Texas' ranked 10th. Texas' economic performance took
the No. 1 position, and Michigan's came in dead last. This, too, supports the
link between economic freedom and migration.

People move to
Texas from all over. When we shift the focus to specific pairs of states,
Florida remains the top migration choice for outbound Michigan residents.
According to Internal Revenue Service data, a net total of approximately 68,000
Michiganders moved to the Sunshine State between 2000 and the end of 2008.
Texas ranks second for outbound Wolverines. From 2007 to 2008, 12,748 of our
fellow residents moved there, while 5,272 Texans came to Michigan, for a net
outflow to the Lone Star State of 7,746.

The IRS data can
actually be broken down by county. The gross outflow from Michigan's three
biggest counties to Texas appears to have increased dramatically. For example,
the number of people moving from Macomb County to Texas increased from
approximately 200 between 2003 and 2004 to 748 between 2007 and 2008, a 274
percent difference. Their most frequent destination was the Dallas/Fort Worth
area. For people from Oakland and Wayne Counties, the Texas county of Harris,
which includes Houston, was the most popular.

Does other
research back up the theory that economic opportunity is why so many people vote with their feet? Over the past decade, migration economists
have narrowed their research to a number of key determinants, among them taxes,
welfare, weather, unemployment rates and labor markets, including wages.

Several
scholarly studies have shown empirical links between these variables and
American migration patterns. The Mackinac Center's own migration study — authored by adjunct scholar Michael Hicks — found that nationwide, people are
moving to states with lower taxes, more flexible labor climates and more days
of sunshine.

Specifically,
Hicks discovered that for every 10 percent increase in personal taxes, Michigan
loses 4,900 people every year thereafter. So, the 11.5 percent personal income
tax increase the Legislature imposed in 2007 has already driven more than
10,000 people out of Michigan.

By contrast,
Texas has no income tax. This would be a distinct advantage even if its overall
tax burden was higher than Michigan's, but in fact it is lower. The Tax
Foundation, based in Washington, D.C., reports that in 2008, Texas' state and
local tax burden ranked 43rd in the nation — one of the very lowest — while
Michigan's was 27th.

Of course, taxes
are just one variable. Michigan's hostile labor climate and regulatory regime
are also adding to a lack of opportunity that's chasing people away. Still,
this is the backdrop against which Michigan now faces a new round of demands for tax increases, including Gov. Granholm's call for a $900 million
hike over three years. Such an increase could be good news for Texas, but bad
news for Michigan.

#####

Michael D. LaFaive is director of the
Morey Fiscal Policy Initiative at the Mackinac Center for Public Policy, a
research and educational institute headquartered in Midland, Mich. Permission
to reprint in whole or in part is hereby granted, provided that the author and
the Center are properly cited.

ISSN: 1093-2240,
SKU: V2010-15

SummaryCalls for higher taxes in Michigan — on top of the state’s fettered economy — will send more Michigan residents packing. Many of them, statistics show, will end up in Texas.